Mah Sing may spend RM1b on properties

Mah Sing Group Bhd, the Malaysian developer that spent the most on land acquisitions in 2010, said it may pay more than RM1 billion (US$330 million) for new sites this year as the fastest growth in a decade spurs sales.

The developer is seeking to buy land with potential sales valued at RM7 billion to RM12 billion, managing director Leong Hoy Kum said in an interview in Kuala Lumpur yesterday. The properties, which will also include commercial buildings, will be developed in the next five to seven years.

Mah Sing is boosting acquisitions as home prices climbed 6.2 per cent to a record in the third quarter, according to government data. Mah Sing spent RM756 million buying 285 acres of land last year, more than double its 2009 investments and beating Malaysian rivals as it bet on increasing property demand with government efforts to boost economic growth.

“We have a war-chest of RM777 million to spend, land banking is part of our aggressive expansion strategy,” Leong said. “The economic outlook remains bright and consumers are more willing to buy big-ticket items like properties.”

Loans disbursed for home purchases in Malaysia rose to RM5.66 billion in December, the highest recorded in nine months, central bank data showed.

Shares of the Kuala Lumpur-based company have jumped 44 per cent this year, the best performer on the FTSE Bursa Malaysia Top 100 Index, which rose 0.9 per cent. SP Setia Bhd., Malaysia’s biggest developer by sales, climbed 6.2 per cent this year.

‘Big League’

“Mah Sing’s aggressive land-banking exercise will catapult it into the big league, making it too big for investors to ignore,” said Terence Wong, an analyst at CIMB Group Holdings Bhd., who rates the stock “outperform.” “For sales to climb over the longer term, it needs fuel to sustain that growth, which means it will have to keep expanding its land bank.”

Prime Minister Najib Razak’s government unveiled an economic transformation program in September aimed at attracting investment, including US$444 billion of programs this decade ranging from mass rail to nuclear power, led by private and government-linked companies.

Malaysia’s economy expanded 4.8 per cent last quarter, spurring full-year growth to the quickest pace in a decade and putting pressure on the central bank to take more steps to curb inflation. The central bank also placed a limit on the loan-to- value ratio for third mortgages in November, which Mah Sing said hasn’t derailed its investment plans.

“There is no property bubble yet,” Leong said. “We’re not overly concerned about inflationary pressures. Inflation is still at a level where the central bank believes is within market control.”

Mah Sing is targeting property sales to climb to between RM2 billion and RM2.5 billion this year, he said. The company sold RM1.5 billion worth of properties last year.

By Bloomberg